In­ter­na­tional Com­merce: Pos­i­tive Trends

In H1 2011, Be­larus’ com­mod­ity ex­port amounted to $7 bil­lion

Economy of Belarus - - CONTENTS - Sergei MAR­TYNOV

In H1 2011, Be­larus’ com­mod­ity ex­port amounted to $7 bil­lion

Sta­tis­tics Are Good

The pro­cesses un­der­way can­not but have a neg­a­tive in­flu­ence on the open economies of the world, and Be­larus is not an ex­cep­tion. Volatil­ity of in­ter­na­tional fi­nan­cial mar­kets, ag­gra­va­tion of the do­mes­tic po­lit­i­cal sit­u­a­tion in a num­ber of coun­tries that are our trade part­ners, pro­tec­tion­ist mea­sures taken

the rais­ing of the state debt ceil­ing, un­prece­dented down­grade of the U.S. credit rat­ing, es­ca­lat­ing debt cri­sis in the EU, ab­sence of bal­ance in in­ter­na­tional trade and a num­ber of other fac­tors clearly show that the world econ­omy is still strug­gling, even though in­ter­na­tional in­sti­tu­tions have worked quite hard to bring the sit­u­a­tion back to nor­mal. Ex­perts’ fore­casts about the rapid sta­bi­liza­tion of the macroe­co­nomic sit­u­a­tion have proved ex­ces­sively op­ti­mistic. to­day the out­look is more re­strained. Ex­perts do not rule out even the sec­ond wave of the fi­nan­cial and eco­nomic cri­sis.

by some of them – this is by far not the com­plete list of the ob­sta­cles that we have to deal with in ad­dis­hon to in­ter­nal eco­nomic prob­lems.

Nev­er­the­less, even in such a dif­fi­cult sit­u­a­tion, which is ag­gra­vated by the un­sta­ble de­mand for com­modi­ties and com­pres­sion of re­gional mar­kets, rise in loan costs, at­tempts of putting us un­der eco­nomic pres­sure, we con­tinue to hold on adapt­ing flex­i­bly and rapidly to the changes in out­side trends.

It is clear that with the open­ness of the Be­laru­sian econ­omy, the achieve­ment of the main goal of this five-year pe­riod, which is to im­prove the well­be­ing of our cit­i­zens and their stan­dards of liv­ing, de­pends on our abil­ity to fine-tune eco­nomic re­la­tions with our for­eign part­ners.

The strate­gic av­enues of our na­tion’s for­eign eco­nomic pol­icy are laid down in the So­cial and Eco­nomic De­vel­op­ment Pro­gram of the Repub­lic of Be­larus for the Years 2011-2015 and the National Ex­port De­vel­op­ment Pro­gram for the same pe­riod. The main goal is to have a bal­anced econ­omy by mak­ing sure that exports ex­pand faster than imports. We are fac­ing an am­bi­tious ob­jec­tive, which is to achieve a 2.2 time in­crease in the ex­port of goods and a 3 time rise in the ex­port of ser­vices in 2011-2015, and reach a trade sur­plus as soon as by the end of 2014.

The Govern­ment, National Bank, min­istries, and lo­cal au­thor­i­ties are do­ing some spe­cific work to achieve the ex­port tar­get and rec­tify our

na­tion’s trade bal­ance. Ac­cord­ing to sta­tis­tics, the mea­sures taken in Be­larus to build up exports and im­prove things in the mone­tary, fis­cal pol­icy in H1 2011 have paved the way for some pos­i­tive trends on our way to­wards a for­eign trade sur­plus.

First of all, we have man­aged to re­verse the ex­port/im­port dis­par­ity, when im­port was ris­ing much faster than ex­port, and as a re­sult put a cap on the growth of the deficit in the trade in goods. In Jan­uary 2011, imports ex­ceeded exports by 41.5%. But in Jan­uary-june, exports rose 8.7% ahead of imports (see the Di­a­gram).

The for­eign trade deficit in Jan­uary-june 2011 was $3 bil­lion, or 52.6% of the 2011 tar­get. And in this we see an op­por­tu­nity of reach­ing the planned fig­ure (mi­nus $5.7 bil­lion) by the year-end with a prospect of reach­ing a trade sur­plus by 2014.

A cer­tain up­turn in the world econ­omy in re­cent months and the weak­en­ing of the Be­laru­sian ru­ble against for­eign cur­ren­cies have also played into the hands of Be­laru­sian ex­porters. The in­crease in com­mod- ity ex­port in the first half of 2011 was $7 bil­lion.

It is also im­por­tant that the exports in­creased across all the ma­jor com­mod­ity groups. The growth came on the heels of the in­crease in the av­er­age ex­port prices (by 25.5%) and their phys­i­cal vol­ume (by 29.3%) un­like in the pre­vi­ous year when the ag­gre­gate rise in exports was due to the dif­fer­ence in prices.

Goals for To­day and To­mor­row

The main rea­son for the for­eign trade deficit now is the in­ef­fi­ciency of some Be­laru­sian com­pa­nies who can­not com­pen­sate for the in­crease in the cost of in­ter­me­di­ate imports by in­creas­ing the phys­i­cal vol­ume of the ex­port of low added-value goods.

There­fore, there is a strate­gic need to change the struc­ture of ex­port to­ward in­creas­ing the share of in­no­va­tive, sci­ence-in­ten­sive high added-value goods, and cut on the con­sump­tion of en­ergy re­sources and raw ma­te­ri­als in or­der to re­duce imports. For this, there is a need to speed up mod­ern­iza­tion of the Be­laru­sian econ­omy and si­mul­ta­ne­ously shift the cen­ter of grav­ity to­ward sci­ence-in­ten­sive in­no­va­tive projects with a min­i­mum de­pen­dence on the im­port of en­ergy, raw ma­te­ri­als and com­po­nent parts.

The mod­ern­iza­tion of the econ­omy re­quires for­eign in­vest­ments. This year we need to have $6.5 bil­lion in for­eign di­rect in­vest­ments. To at­tract these funds, it is not enough to in­vite strate­gic in­vestors to par­tic­i­pate in the pri­va­ti­za­tion pro­gram. We also need to col­lab­o­rate with the world’s lead­ing transna­tional cor­po­ra­tions and in­vest­ment com­pa­nies. At the mo­ment, our for­eign diplo­matic in­sti­tu­tions are work­ing hard to find well-con­nected in­vest­ment agents in­ter­ested in rep­re­sent­ing Be­larus in the in­ter­na­tional arena tak­ing into ac­count mu­tual in­ter­ests.

To achieve bal­ance in our ex­port/ im­port op­er­a­tions and the pay­ment bal­ance, we also need to match our do­mes­tic spend­ing, bud­get ex­penses, lend­ing schemes and salary pay­ments with the growth of in­dus­trial pro­duc­tion, GDP, and la­bor pro­duc­tiv­ity.

We also con­tinue seek­ing ways to sell more Be­laru­sian prod­ucts in our tra­di­tional mar­kets by cre­at­ing com­mod­ity dis­tri­bu­tion net­works, ser­vice and lo­gis­tic cen­ters, assem­bly plants, etc. Our com­pa­nies need to work harder on this; they should open more cen­ters out­side Be­larus to be able to process mil­lions of tonnes of cargo that Be­larus exports.

Equally im­por­tant is to ex­plore new promis­ing mar­kets and es­tab­lish stronger com­mer­cial ties with the dy­namic economies across the world. Ex­port di­ver­si­fi­ca­tion is both a means to strengthen our eco­nomic se­cu­rity and a log­i­cal way to boost the econ­omy.

The For­eign Min­istry to­gether with other stake­hold­ers con­tin­ues to work hard on ex­pand­ing the ge­og­ra­phy of sales of Be­laru­sian prod­ucts. In H1 2011, Be­laru­sian-made goods were de­liv­ered to 20 new des­ti­na­tions (Uruguay, Bar­ba­dos, Bahrain, Benin, Bo­livia, Cam­bo­dia, Panama, Peru, Suri­nam, El Sal­vador, and other des­ti­na­tions). Our ex­porters have strength­ened their po­si­tions con­sid­er­ably in Afghanistan, Viet­nam, Hon­duras, Greece, Morocco, Ethiopia, Nige­ria, Chile, Bangladesh, Aus­tralia, Malaysia, and Mon­go­lia. The rise in ex­port to these coun­tries in Jan­uary-june was over $300 mil­lion. Be­laru­sian com­pa­nies have joined forces with diplo­matic mis­sions to find new mar­kets for our buses and trol­ley­buses (to Venezuela); trac­tors and semi-trailer trucks (to Hun­gary); heavy-duty trucks (to Bul­garia and South Africa); potash fer­til­iz­ers (to Ar­gentina, Ivory Coast, Bel­gium).

We con­tinue set­ting up new assem­bly plants abroad. The pri­or­ity is given to es­tab­lish­ing joint ven­tures with our for­eign part­ners. All in all, we now have 103 over­seas assem­bly plants, with 16 of them launched in Jan­uary-june 2011. Sixty of them are lo­cated in Rus­sia, 13 in Kaza­khstan, 7 in Ukraine, 4 in China, 3 in African coun­tries, 2 in Azer­bai­jan, 2 in Lithua­nia, 2 in Latvia, 2 in Ser­bia, 1 in Moldova, Kyr­gyzs­tan, Uzbek­istan, Poland, Slo­vakia, Viet­nam, Ro­ma­nia, and

Iran. The trends are pos­i­tive, but our pro­duc­ers need to work harder on pro­vid­ing high-qual­ity af­ter­sales/main­te­nance ser­vices.

An­other strate­gic ob­jec­tive is to max­i­mize the share of ser­vices that bring profit, in­clud­ing by tak­ing ad­van­tage of Be­larus’ tran­sit op­por­tu­ni­ties. The ex­port of ser­vices could some­how com­pen­sate for the ex­penses as­so­ci­ated with the im­port of goods, and in the fu­ture it could be­come the main source of for­eign currency rev­enues in Be­larus.

We also have huge op­por­tu­ni­ties for ad­vanc­ing the econ­omy through the col­lab­o­ra­tion be­tween the govern­ment and pri­vate busi­ness. The govern­ment thus par­tic­i­pates in pri­vate busi­ness ini­tia­tives and in­vites busi­nesses to par­tici- pate in so­cially sen­si­tive projects un­der the um­brella of the state. The main ar­eas where we could use this form of col­lab­o­ra­tion are in­dus­trial pro­duc­tion and trans­port in­fra­struc­ture, sci­en­tific re­search with com­mer­cial prospects, in­no­va­tion, and telecom­mu­ni­ca­tion. This kind of col­lab­o­ra­tion could ease the bur­den on the state bud­get and help diversify pro­duc­tion. There are plans to adopt a pub­lic-pri­vate part­ner­ship pro­gram in Be­larus set­ting out clear-cut goals and mech­a­nisms for ev­ery sec­tor of pub­lic in­fra­struc­ture and a fit­ting reg­u­la­tory le­gal frame­work. And the last thing. One of the For­eign Min­istry’s main ar­eas of work is to pro­vide more sup­port to Be­laru­sian ex­porters. Be­larus has re­cently adopted some of the in­ter­na­tion­ally ac­cepted prac­tices of govern­ment-spon­sored cred­it­ing and in­sur­ing ex­port and ex­port risks, and in­ter­na­tional leas­ing. We are look­ing for ways to cre­ate a spe­cial­ist ex­port bank in Be­larus, ease the pro­ce­dure of grant­ing pref­er­en­tial ex­port loans, in­tro­duce in­ter­na­tional meth­ods of grant-based sup­port for ex­porters which im­plies com­pen­sat­ing for busi­nesses’ ex­penses re­lated to the ex­port (cer­ti­fi­ca­tion of prod­ucts, in­for­ma­tion and mar­ket­ing ser­vices, par­tic­i­pa­tion in ded­i­cated exhibitions abroad, etc.).

*** There is still a lot to be done to strengthen Be­larus’ eco­nomic se­cu­rity. De­spite the ex­ist­ing prob­lems and new chal­lenges, the cur­rent for­eign trade fig­ures prove the ef­fec­tive­ness of our for­eign eco­nomic pol­icy.

The joint Be­laru­sian-ger­man

joint ven­ture Bemkromgaz, which pro­duces gas me­ters, plans to

in­crease exports to Rus­sia by more than 60%

in 2011

Ra­doshkovichi Ce­ramic Fac­tory, one of the coun­try’s largest pro­duc­ers of ce­ramic bricks, re­ported a 16.9% in­crease in ex­port earn­ings in Jan­uaryJuly this year

The Gomel com­pany Bot­ti­celli, a man­u­fac­turer of chil­dren’s shoes, exports more than 60% of its out­put

Be­larus needs to take additional mea­sures to make its lo­gis­tics busi­ness more at­trac­tive, Prime Min­is­ter Mikhail Myas­nikovich said dur­ing his visit to the Twenty Four lo­gis­tics com­pany in July 2011

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